Expect more restaurant bankruptcies in 2025, expert says

MT HANNACH
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A growing number of large restaurant channels Will probably continue to deposit protection against bankruptcy in the coming years while industry has trouble managing the heavy debt it has accumulated during the Pandemic COVID-19, according to bankruptcy Daniel Gielchinsky.

“The restaurants that exist today may not exist in five years. They will be out of the card,” said Gielchinsky. In addition, consumers “will see a lot of restaurants with a decrease in the footprint,” he added.

The last victim could be Hoots of America, who plans to file for bankruptcy as a means of restructuring the restaurant chain and tackling his debt, recently told Bloomberg. The company would be the last of a growing list of major channels such as TGI Friday’s, Denny’s, Ruby Tuesday, Rubio’s Coastal Grill and Red Lobster who asked for protection before the bankruptcy court.

Other companies, including those that have not deposited bankruptcy protection, have considerably reduced their footprint to better position themselves in the current environment. Wendy, for example, announced in November that it was Closing 140 underperforming locations Until the end of 2024, while he seemed to improve his “restaurant footprint and his overall system of the system”.

Hooters looking at a possible bankruptcy deposit

Gielchinsky said that “small restaurants and restaurants Maman-et-Pop are also undergoing”.

Several factors have led to their fall, according to Gielchinsky, founder and partner of Dgim Law, based south of Florida. However, the COVVI-19 pandemic was the catalyst, because the industry saw traffic decrease considerably.

An increasing number of large restaurant channels could continue to deposit protection against bankruptcy in the coming years, said bankruptcy lawyer Daniel Gielchinsky. (Michael Nagle / Bloomberg via Getty Images / Getty Images)

The operators wanted to keep their doors open, so they had to cover costs such as rent, insurance and payroll, even if customers did not come. loans to finance commercial spending. This meant that companies have accumulated debts that they had to reimburse over time more interest.

“There is no exhaust loan, you will always have to reimburse this money or end in bankruptcy and reorganize the structure of the debt,” said Gielchinsky.

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The problem, however, is that the industry expected that consumer expenditure in restaurants come back to pre-pale levels once things have returned to normal. When this did not happen, the debt restaurants could not reimburse these loans, according to Gielchinsky.

High -level income has never rebounded, according to Gielchinsky, who said that “customers have never returned to force” due to changes in their habits and spending capacities.

A general view of the Hooters restaurant on January 12, 2007. (Chung Sung-Jun / Getty Images / Getty Images)

Consumers have used to eat more at home and save their disposable income for other things, which led them to stop going out in restaurants three to four times a week.

In addition to this, inflation struck consumers harder, in particular low -income households, who constituted a large part of fast -service catering customers.

He also added that the Popularity of weight loss drugs plays a role. Medicines have convinced more people to rely on healthier habits such as home cooking.

A sign is displayed outside a red lobster restaurant on April 17, 2024 in Rohnert Park, California. (Justin Sullivan / Getty Images) / Getty Images)

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Large heavy industry strikers reported a drop in store sales in consecutive quarters.

David Gibbs, Yum CEO! Brands, parent of KFC, Taco Bell and Pizza Hut, told analysts earlier this month that sales in KFC stores had decreased by 2% during the fiscal year. In the past three months of the year, sales have remained stable compared to the same period last year.

TGI Fridays Restaurant Princeton New Jersey

A TGI Friday restaurant in Princeton, New Jersey, August 14, 2018. (Michael Brochstein / Sopa Images / Lightrocket via Getty Images / Getty Images)

McDonald’s CEO Chris Kempczinski, had previously warned that even if he provided a difficult environment in 2024, his performance for the year had missed his expectations. The company has deployed a new menu of value in its restaurants in order to rejuvenate traffic.

In his call for results earlier this month, McDonald’s financial director Ian Frederick Borden, said that the company’s prospects in 2025 reflect the current environment of the softer catering industry and declining in the United States ”

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